The GBP/USD pair rebounded from its recent swing low on Monday, propelled by a surge in risk appetite in global markets. The pair climbed to 1.2650, although further progress was hindered by technical resistance at the 200-hour Exponential Moving Average (EMA). With limited high-impact economic data releases in the early part of the week, traders are closely monitoring central bank policymakers’ remarks for clues about future monetary policy decisions.
Market Drivers: Risk Appetite and Central Bank Commentary
- Risk-On Sentiment: A positive risk appetite is driving the GBP/USD pair higher, as investors express optimism about the global economic outlook and potential Fed rate cuts.
- Fedspeak: Federal Reserve officials, like Mary Daly and Austan Goolsbee, have offered contrasting views on the inflation outlook, creating some uncertainty in the market. Daly expressed caution about the overall inflation trajectory, while Goolsbee remained optimistic about further progress.
- Upcoming Data: Traders are looking ahead to key data releases later in the week, including US and UK GDP updates and US Personal Consumption Expenditure (PCE) Price Index figures, which could significantly impact the pair’s trajectory.
Technical Outlook: GBP/USD Tests Key Resistance Level
The GBP/USD pair gained momentum on Monday, rising by 0.6% from Friday’s lows. However, the 200-hour EMA at 1.2695 is acting as a significant resistance level. The pair is currently trading just above the 200-day EMA at 1.2603, but further downside could occur if the 50-day EMA at 1.2673 fails to hold.
Key Takeaways:
- GBP/USD is rebounding on the back of increased risk appetite and Fed rate cut expectations.
- Conflicting commentary from Fed officials is creating some uncertainty in the market.
- Upcoming economic data releases, including GDP and PCE inflation figures, will be crucial for determining the pair’s future direction.
- Technical analysis reveals key resistance and support levels for traders to monitor.
